City and Anaheim Ducks Propose 25-Year Lease and Development Around Honda Center

The city of Anaheim is negotiating a 25-year lease with the Anaheim Ducks hockey team and the operators of the Honda Center to develop properties surrounding the center into a mixed-use entertainment complex.

The city announced a negotiating framework for the deal shortly after the city’s baseball team, the Los Angeles Angels of Anaheim, terminated its lease agreement beginning in October 2019, setting off a new round of negotiations over where the team will call home.

“I think there is a tremendous opportunity here to work with folks at Anaheim Arena Management to keep the Ducks here for an awfully long time,” said Mayor Tom Tait at a city council meeting Oct. 23. “It might seem a little early because it’s not a final agreement, but I want to let the public know…and encourage the public to weigh in on it.”

The broad terms of the deal were approved unanimously by the Anaheim City Council at the Oct. 23 meeting and call for the city to sell three Honda Center parking lots, plus a lot across the street, at fair market value to Anaheim Arena Management (AAM), which could be developed into homes, office and commercial space. The vote gives city staff a framework to negotiate the final terms of the deal for later approval by the city council.

The Ducks, who have been based in Anaheim the past 25 years, would sign onto another 25-year commitment with Anaheim after their current agreement ends in June 2023. Anaheim Arena Management, which currently operates and maintains the Honda Center, would continue operating the facility until 2048.

It also calls for Anaheim Arena Management to take over operations of the troubled Anaheim Regional Transportation Intermodal Center (ARTIC) train station, which has operated on a deficit since opening in 2014. Under the proposal, AAM would assume all responsibility for operating losses. Beginning in 2017, the city has paid the facility’s deficit – averaging $2.5 million a year – from its general fund.

“It’s a very big deal and a good deal,” Tait said.

Ducks’ Proposal

The 820-acre area around the Honda Center, Angel Stadium and ARTIC is known as the Platinum Triangle, a planning area with nearly $1.5 billion in new mixed-use developments in the pipeline.

Current city planning documents allow for 17,501 residential units, 4.8 million square feet of commercial space, 9.2 million square feet of office development and 1.5 million square feet of institutional uses, like universities, government or hospital facilities.

At the council meeting, city staff said the proposed Honda Center development would be modeled after entertainment complexes like L.A. Live, which is located in downtown Los Angeles and includes the Staples Center, LA Convention Center, a retail plaza, hotels, condominiums, concert theaters, restaurants and more.

Changing a profit-sharing agreement for the Honda Center so that the city receives half of all profits after a $6 million threshold. The current lease gives the city 20 percent of all profits after $12 million, but because the Honda Center has never generated $12 million in profits, the city has never collected any extra revenue.

Create a profit-sharing agreement for ARTIC where the city receives 60 percent of all revenue and AAM receives 40 percent.

Create a new digital advertising sign along the 57 Freeway at ARTIC

Through spokeswoman Erika Hall, Anaheim Arena Management issued a brief statement and declined to comment on the deal specifically.

“We’re excited to work with the City of Anaheim as we continue to plan for the future of the Anaheim Ducks and Honda Center,” said Hall. “We are always looking to improve the fan experience and bring Anaheim the very best in world-class entertainment.”

Councilman Stephen Faessel, who otherwise called the proposal a “great deal,” questioned why the deal includes the sale of a parking lot across from the Honda Center by ARTIC without a formal bidding process where other developers could also bid for the property.

“ARTIC is not that far from Angel Stadium, and now we’re likely going to have to negotiate a deal with the Angels, how do we know the Angels won’t give us a better deal?” Faessel said.

Tait said selling the ARTIC lot to Anaheim Arena Management would make it easier to construct a proposed pedestrian bridge over Katella Avenue, so the city would not have to negotiate with multiple entities to construct the bridge.

City spokesman Mike Lyster later clarified the city is not considering selling the ARTIC lot, but may lease it to the Honda Center.

Councilwoman Lucille Kring called the deal a “no-brainer” and said no other developers have approached the city with interest in the lot next to ARTIC. She praised Anaheim Arena Management for the proposal to take over operations of ARTIC.

“No one else has come to the city. AAM has said we’re there, we’re want to do it,” Kring said. “$2.5 million from the general fund is phenomenal, it’s fabulous, it’s great – I don’t know how many police officers you can get…but it’s better in our general fund than writing a check every year to ARTIC.”

Faessel and Kring also raised concerns the new deal would reduce the number of suites at the Honda Center, which each have 20 seats, available to the city from two suites to one.

Councilmembers each receive four tickets in those suites, with an additional seven tickets for the mayor and mayor pro tem, and six for the city manager. Most of those tickets are given to nonprofit groups for fundraisers and city employees, although council members can also use those tickets personally. Officials are required to disclose ticket giveaways on the city website.

Councilwoman Kris Murray accused Tait of dragging his feet on making the terms of the deal public, saying he could have opened up the discussion months earlier in order to get it finalized before a new city council is installed in December.

“I’m confused as to why we’re inviting the public in at this point unless it’s purely symbolic. It’s right in front of the election,” said Murray. “If this were truly about engaging the public constructively, why did we not do this months ago?”

Murray was supportive of the deal but said it should be much farther along.

“Vision and leadership take action – it’s getting together and getting the job done, not just sitting back and waiting for it to be delivered to us,” Murray said. “I would ask that you do that as mayor in your final months.”

Other council members disagreed with Murray’s characterization, saying the terms of the deal have only solidified in recent months.

Tait said he would like to be able to vote on the deal before the next city council is sworn in – Tait is termed-out this year and three other council seats are up for grabs – but he doesn’t want to rush the process.

The council gave staff the go-ahead to begin negotiating the deal in early 2017, and the city council has discussed the deal in five closed sessions starting in January of this year.

“There’s no giveaways, there’s no subsidy,” Moreno said. “And the Ducks didn’t ask us for any of that.”

He also expressed concern about losing the city council suites, but said the focus should be on keeping the team in Anaheim.

Pressure from Angels’ Baseball

Since news of the Angels’ termination of the lease broke last week, critics of the current city council have framed the team’s decision as a result of Tait’s hardline opposition to subsidies and special deals to benefit the city’s corporations and sports teams.

Tait was a vocal critic of a proposed lease during a round of negotiations in 2013, when a previous city council approved a negotiating framework that grants Angels owner Arte Moreno the land around the stadium for 66 years at $1 per year.

The idea was for Moreno to develop the property and use those revenues to finance $150 million in improvements for the city-owned stadium. That negotiating framework also would allow Moreno to drop “Anaheim” from the team’s official name.

Murray called the Angels’ lease termination the result of a toxic political environment for local businesses and tied the decision to a recent move by the Disneyland Resort to cancel a four-diamond hotel project.

“There are very severe concerns about the business environment in the city,” Murray said. “There are a lot of unknowns that November holds.”

Others have suggested the Angels’ timed their announcement as an election season pressure tactic.

Asked if Anaheim is the team’s first choice, Angels’ spokeswoman Marie Garvey said the team is trying to keep all its options open and is looking for “long term certainty.”

Garvey said the decision was solely based on a deadline in the lease which required the team to notify the city of intent to terminate the agreement by Oct. 16, 2018.

“We really made the decision because Oct. 16 was the last day we could exercise the one-time opt out, otherwise we’d have to wait until 2049,” said Garvey.

Angel Stadium, constructed in 1966, is the fourth oldest baseball stadium in the country. It last underwent major renovations in 1993, when Disney acquired the team.

Arte Moreno has also invested about $1 million a year on infrastructure and maintenance of the stadium, said Garvey.

How costs to renovate the aging stadium will be split will be a central part of any negotiations between Anaheim and the Angels going forward.

“This gives parties a chance to start up fresh and come up with an agreement that makes sense for the city and that recognizes the tremendous value of the property, and [of having] a sporting team named after your city,” Tait said.